Privatisation team fights for powersWednesday February 08 2023
The Privatisation Commission has opposed a plan to hand the National Treasury more powers in selling public enterprises under proposed changes to the law.
The Commission, which will be renamed the Privatisation Authority if new changes are adopted, argues that granting of powers to the National Treasury Cabinet Secretary to appoint members to the authority is a threat to its independence.
“We want to remain independent and wouldn’t want to be a rubberstamping authority on Treasury’s decisions. We do, however, want to help the government to sell entities to realise value for money,” said Privatisation Commission Chairman Faisal Abass.
In the proposed changes carried under the 2023 Privatisation Bill, the National Treasury Cabinet Secretary is set to appoint members of the Privatisation Authority without oversight checks from Parliament, handing the exchequer a greater role in the running of the entity.
Read: What you need to know about Kenya's Privatisation Bill
Previously, the 2005 Privatisation Act required the Treasury Cabinet Secretary to appoint members to the commission through a competitive process and approved by the National Assembly.
With the elimination of Parliament’s role, the Privatisation Commission wants the appointment of members to the authority to take a competitive process in view of maintaining the entity’s autonomy.
The new Bill, which has now been through public participation seeks to bridge the gap to the privatisation of new entities.
The Privatisation Commission has listed bumps to the process under the previous legal dispensation including the involvement of Parliament in the recruitment and appointment of commission members and delays in the provision of information by entities in the privatisation program.
Other reasons cited for the lull in privatisation include the lack of an Alternative Dispute Resolution Mechanism and the non-alignment of the 2005 Privatisation Act with the 2010 Constitution and new laws such as the Public Procurement and Assets Disposal Act.
The privatisation team has only seen success through the sale of the Kenya Wines Agency Limited despite listing 26 entities in the inaugural privatization programme which was approved by Cabinet in December 2008.
The balance of 25 entities which were to be sold include the Kenya Pipeline Company Limited, Kenya Ports Authority, the Kenya Tourist Development Corporation, Consolidated Bank, Development Bank of Kenya and Agrochemical and Food Corporation.
The list further covers ailing State millers- Chemilil Sugar, South Nyanza, Nzoia, Miwani and Muhoroni. The programme also proposed further share divestitures by the government in listed firms including KenGen, East Africa Portland Cement and the National Bank of Kenya.
The National Treasury is now expected to be at the frontline of new privatisations by initiating the process including formulation of a new sale plan which shall be approved by Cabinet.
Read: New Bill eliminates Parliament's nod in sale of parastatals
“The Cabinet Secretary shall identify and determine the entities to be included in the privatization program,” reads part of proposals in the 2023 Privatisation Bill.
The changes to the privatisation framework have stemmed from the government’s goal of spurring listings at the Nairobi Securities Exchange while unlocking revenue for the government to plug financing into the budget.
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